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Sometimes
FATE works in my favor, not that I’m “happy” about this
topic. Last week, I noted that the Cartel destroyed Tuesday’s
HUI gain on Wednesday – even though gold prices were down just a measly
buck – and this past weekend, I wrote the following:

Amazingly,
the HUI only fell eight points Friday – or half its Thursday gains
– as I was positive they would attempt to reverse all of
Thursday’s gains, as they did on Wednesday with Tuesday’s gains.

And this
in Monday morning’s commentary:

I should
have known something was up when – yet again – the HUI opened
lower with gold, silver, and the Dow higher, particularly when Silver Wheaton
(SLW) – the world’s largest silver company – was down 3% in
premarket trading for no apparent reason.

As I write
at 12:45 PM EST Monday, the Dow is up 70, gold is down $6, and silver is unchanged.
However, the HUI is down 7.5 points , or 1.8%; in other words, it has now
lost nearly all of Thursday’s 17 point gain, taking just the extra day
to do so. Moreover, Silver Wheaton is down a whopping 5.5%, again based on no
discernible news. Not that much “news” occurs with SLW, which
generates royalties from more than 20 mines on four continents, and just weeks
ago reported record annual earnings, 92% higher than in 2010.

The reason
I am focused on Silver Wheaton is because I view it as the world’s best
PM company, with one of the worst stocks. For years it was my largest
holding, either directly or via a junior mining stock called Silverstone that
SLW acquired in early 2009. However, I sold it – and ALL my PM miners
– last August after the Cartel naked shorted it into oblivion,
and as you can see below, SLW now trades at the same level as on
“D-DAY” – November 9th, 2010 – when
GOVERNMENT COMPUTERS took over the HUI for good. Gold was $250/oz lower back then – and the Dow 2,700 points- yet
Silver Wheaton – record earnings and all – has seen its P/E
multiple contract to record low levels.

As have
the handful of PM miners that actually make PROFITS after a 12-year
bull market, which by my estimation is no more than 2% of all such companies on
Earth.

And
don’t even go into the junior miners, down more than 40% in the
past year – on average – with the majority closer to 60%-70%, at
or near the all-time lows of late 2008 and – before that –
the Bre-X
scandal of the late-1990s, when the HUI dropped to 40. Below is a
chart of the TSX-Venture (Vancouver) Index, which peaked five years ago
this month, down 55% since with not a spark of life to be seen.

It may
seem like I “harp” on mining shares a lot, but then again, 90% of
my writing is spent harping on the same handful of topics. The overarching
theme is to PROTECT YOURSELF, and in my view “PAPER PM
INVESTMENTS” represent the antithesis of protection. In essence,
they are pure speculations with instruments possessing myriad, exponentiallyexpanding risks within a “market” where a malignant,
omnipresent Cartel creates limitless supply that will NEVER, EVER
stop.

That is,
not until the Cartel is permanently BROKEN, which could occur tomorrow, but
may take six months…or a year…or even two in what I would view an
extreme scenario. Until then, your capital is at extreme risk, with
such perils only increasing afterwards. AFTER the inevitable
Cartel collapse, I don’t expect the window of opportunity for mining
stocks to be EXREMELY short in duration, as it won’t take long before windfall
profits tax and nationalization rumors proliferate, most likely
started by the Cartel itself in a desperate effort to prevent slow the PM
mania.

And then,
the nationalizations will commence, and again I thank FATE for
choosing today’s topic, per the MAJOR headline that crossed the tape this
morning…

YPF, the
largest oil producer in Argentina – which I know well from my oil analyst
days of 1996-2005 – is being NATIONALIZED by the Argentinian
government. No warnings, no hints, NOTHING. And this is just an oil company
during middling economic times, a
“non-event” compared to the political MANIA likely to envelope PM
mining companies in the aftermath of currency COLLAPSE and HYPERINFLATION.

Adding
insult to injury, YPF is actually a joint venture with Repsol, Spain’s THIRD LARGEST COMPANY and likely
one of the dying nation’s most profitable. Amidst today’s global
economic recession, few companies outside Oil & Gas are making
significant profits, just as in tomorrow’s FINANCIAL ARMAGEDDON, PM
miners will likely be the world’s most profitable, making them far more
attractive nationalization/expropriation candidates. Of course, at that time
gold and silver will finally be understood to be the REAL MONEY they have
always been, so such “profits” will become secondary to
RESOURCES.

The beauty
of my recommendation to SELL ALL MINING STOCKS and buy PHYSICAL gold and
silver is that it CANNOT lose. PHYSICAL PMs avoid ALL the risks noted above,
let alone operations, taxation, brokerage, and systemic equity market risks,
and are GUARANTEED to PROTECT you from the HYPERINFLATION certain to
envelope the global financial system as the PONZI SCHEME that is fiat
currency meets its inevitable demise.

Moreover,
the less interest in mining stocks, the less capital that will be available
for mine development, which will further boost PHYSICAL gold and silver
prices. The Cartel has starved mining companies of capital for five years,
and in that time NONE have fought back for their shareholders, so why should
you? Instead, let the miners figure out how to capitalize on the most
lucrative bull market of our lifetimes, while you sleep well and watch your
PHYSICAL gold and silver rise more than 99% of investments in the HISTORY.

Andrew Hoffman was a buy-side and sell-side analyst in the United States (including six years as an II-ranked oilfield service analyst at Salomon Smith Barney), but since 2002 his focus has been entirely in the metals markets, principally gold and silver. He recently worked as a consultant to junior mining companies, head of Corporate Development, and VP of Investor Relations for different mining ventures, and is now the Director of Marketing for Miles Franklin, a U.S.-based bullion dealer.